MetLife spins off RGA…
WellPoint enters managed care market…
End of the road for Aviva and ABN AMRO…
Financial advisers to help US regulators…
HSBC gets Indian life insurance go-ahead…
MetLife spins off RGA
US insurer MetLife has announced its intention to dispose of the
bulk of its 53 percent stake in life reinsurer Reinsurance Group of
The disposal will take the form of an offer of RGA shares to
MetLife in exchange for MetLife ordinary shares.
Based on RGA’s current market capitalisation of $3.1 billion the
transaction will be worth about $1.6 billion. MetLife’s market
capitalisation is about $42 billion.
One of the world’s largest life reinsurers RGA reported total net
premium income of $727.1 million in the first quarter of 2008, up 8
percent compared with the first quarter of 2007. As at 31 December
2007 RGA, which has units in 21 countries, had $2.2 trillion of
life reinsurance in force, and assets of $21.8 billion.
MetLife’s stake in RGA dates back to 1999 when it acquired insurer
GenAmerica Corporation’s units which included RGA’s major
shareholder and founder, General American Life.
MERGERS AND ACQUISITIONS
WellPoint enters managed care market
Reflecting what it terms a growing demand from consumers for
personalised, actionable health care guidance WellPoint, the US’
largest health insurer, has acquired Resolution Health, a company
specialising in the analysis of health records.
In addition to being a service supplier to WellPoint, Resolution’s
clients include other insurers, benefit consultants, health plans,
large self-insured employers, third party administrators and
pharmacy benefit management companies.
“Resolution is built on the belief that the quality and cost
effectiveness of health care can be dramatically improved through
clinically sound, individual member-focused communications
programmes,” said its president and CEO of Resolution Health, Earl
In essence, Resolution analyses medical and pharmacy claims data,
laboratory results, health benefit plan information and personal
health information of individual plan members with the objective of
improving treatment by, for example, identifying potential drug
interactions and shortcomings of existing care they are
End of the road for Aviva and ABN AMRO
A bancassurance joint venture (JV) between UK insurer Aviva’s
Netherlands’ based Delta Lloyd unit and Netherlands bank ABN AMRO
dating back to 2003 and intended to run for 30 years is to be
Underlying the termination is the three-way break up of ABN AMRO
between a consortium that includes bancassuer Fortis that is to
adopt the ABN AMRO brand name for its Netherlands retail banking
The wind up of the JV will see ABN AMRO acquire Delta Lloyd’s 51
percent stake for a yet to be determined sum that will include a
In 2007 Delta Lloyd’s share of new life business premiums and gross
general insurance premiums written through the JV was £183 million
($362 million) and £93 million, respectively.
The JV represented less than 1 percent of Aviva’s new life new
business premiums in 2007.
Financial advisers to help US regulators
In an unusual move US regulators have turned to the private sector
The Securities and Exchange Commission (SEC), the North American
Securities Administrators Association (ASAA) and the Financial
Industry Regulatory Authority (FINRA) have approached Financial
Services Institute (FSI) for assistance in identifying effective
procedures used by financial services firms in dealing with senior
Established in 2004 the FSI’s membership comprises 118
broker-dealers, 138,000 independent registered representatives and
12,500 independent financial advisers.
The FSI emphasised that the initiative was not aimed at developing
new regulations but to assist financial industry companies to
better meet their obligations to senior customers.
Aspects that will be studied include:
• Marketing and advertising;
• Account opening;
• Product and account review;
• Review of appropriateness of products;
• Surveillance and compliance review
• Meeting evolving client needs as they age; and
• Staff training.
The initiative forms part of a joint campaign to protect seniors
launched by the SEC, ASAA and FINRA in 2006.
AXA to revamp brand image
AXA has announced, but provided no detail of, what it terms
“enhancing its brand strategy by adopting a new signature.” The
move is in response to findings of a year long survey of almost
100,000 clients, employees and distributors conducted by the French
insurer in its 10 main markets in which it does business.
The objective of the survey was to better understand expectations
towards the financial services industry. Answers, said AXA, were
unanimous. “Whatever the market, the product or the distribution
channel, the clients do not want more promises, but action and
concrete facts, proof of quality of advice, service and welcoming
attitude. Their wish is to have a partner who is available,
attentive and reliable and with whom they can build a lasting
relationship of trust.” Of concern, noted AXA was that “they view
our industry as unable to give a satisfying answer to their
Commenting chairman of AXA’s management board Henri de Castries
said the new brand strategy was aimed at proving to its customers
that “they were right to trust us.” Their trust, he continued “can
not be decreed. It must be won by showing we deliver on our
Aon granted Saudi Arabian licence
Aon Corporation has become one of the first international insurance
and reinsurance brokers to be granted a license by the Saudi
Arabian Monetary Authority. The licence consolidates the US
company’s position in Saudi Arabia where it has operated
representative offices since 1979.
In a statement Aon highlighted that the Middle East’s insurance
sector is “rapidly evolving,” driven by factors such as development
of takaful (Islamic Sharia law compliant) insurance products,
introduction of legislation for compulsory health and motor
insurance in some countries and major infrastructure projects
across the region.
In Saudi Arabia specifically Aon noted that the insurance industry
is being driven by a $624 billion investment programme and the
creation of six new cities designed to attract industry and create
about one million jobs.
MERGERS AND ACQUISITIONS
ING targets German mortgage market
ING DIRECT, the internet banking unit of Netherlands bancassurer
ING Group is to make a public tender offer for Interhyp, a German
independent residential mortgage distributor. The offer which
values Interhyp at €416 million ($649 million) will be launched
during June 2008.
Founded in 1999, Interhyp offers residential mortgages from over 50
banks, mostly via the direct (internet and telephone-based)
channel. With more than 38,000 closed mortgages and a distributed
mortgage volume of €5.7 billion in 2007 it is, according to ING, by
far the largest independent residential mortgage distributor in
Germany. ING has already received an irrevocable commitment from
Interhyp’s two founders and co-CEOs to tender their 32 percent
stake in the company.
ING completes share buyback
On 26 May ING Group announced that it had completed an open market
buyback of ordinary shares which it commenced on 4 June 2007. On
completion the Netherlands bancassurer had repurchased 183.158
million shares for a total consideration of €4.9 billion ($7.7
billion) at an average price of €26.77 per share.
The repurchase programme has left ING holding 9.9 percent of its
own capital, a level just short of the 10 percent maximum legal
limit. The repurchased share are to be cancelled at the end of June
2008. On 26 May 2008 ING’s share price closed at €24.07 per share,
valuing the repurchased shares at a total of €4.42 billion.
HSBC gets Indian life insurance go-ahead
India’s Insurance Regulatory and Development Authority has
registered India’s nineteenth life insurer, Canara HSBC Oriental
Bank of Commerce Life Insurance Company Limited (CHO Life). First
announced in March 2007 CHO Life is a joint venture between Indian
banks Canara Bank and Oriental Bank of Commerce (OBC) which hold
stakes of 51 percent and 23 percent, respectively, and UK banking
group HSBC’s Hong Kong based HSBC Insurance (Asia Pacific) which
holds a 26 percent stake.
Canara Bank has 2,500 branches and 28 million customers while OBC
has 1,100 branches and 10 million customers. Both banks are state
CHO Life’s initial capital is $73 million, of which HSBC
contributed $40 million, Canara Bank $23 million and OBC $10
Chinese quake claims mount
Though still low, claims payments by insurers following the
devastating earthquake in China are mounting.
As of 4 June, 200,000 claims for payments totalling RMB233 million
($33 million) had been made according to China’s official news
agency Xinhua. Total payments were up from RMB50 million two weeks
Of total claims paid as of 4 June, RMB142 million was paid by life
insurers and RMB91.51 million by general insurers. What the final
total to be paid by insurers will be is vague. German reinsurer
Munich Re has, for instance, predicted that total losses will
ultimately be between €300 million ($468 million) and €1 billion.
Earlier this year China’s insurance industry paid out RMB3.7
billion to cover claims made as the result of a series of snow
storms that hit 19 Chinese provinces.
BUPA secures position in Saudi Arabia
BUPA Middle East (BME), a unit of UK health insurer BUPA and the
only specialist health insurer in Saudi Arabia, has been granted by
royal decree a license to operate as a co-operative health care
insurance company in Saudi Arabia. BME, which has had a presence in
Saudi Arabia since 1997, is to be renamed BUPA Arabia and will
shortly undertake an initial public offer in which 40 percent of
its capital of SR400 million ($107 million) will be offered.
“Having the royal decree issued is a huge step for us,” said BME’s
MD, Tal Nazer. A royal decree is only issued to medical insurance
companies that meet licensing and qualification requirements set
out in regulations introduced in 2006. In addition to licensing
requirements the regulations also made health insurance compulsory
for the approximately 6 million expatriate workers in Saudi
UK new business goes into reverse
Tough economic conditions took their toll on the UK’s life
insurance industry in the first quarter of 2008 reveals data
published by the Association of British Insurers (ABI). With two
exceptions, premium income was down across the 11 categories with
total regular and single premium business falling 14.6 percent
compared with the first quarter of 2007 to £17.44 billion.
The most damaging declines were in the two largest categories,
single premium investment and savings products and single premium
private pensions, where new business fell 27.7 percent to £6.51
billion and 12.4 percent to £4.68 billion, respectively.
The only bright features were regular personal pensions where
premium income increased by 4.4 percent to £838 million and single
premium occupational pensions where premium income increased by 24
percent to £2.84 billion.
Tackling spiralling US healthcare costs
Countering rising healthcare and health insurance costs in the US
is a major concern, to the health industry in the United States.
One health industry body, America’s Health Insurance Plans (AHIP),
is tackling the problem head on. Their bold proposal is based on
five principals, and their solution encompasses areas such as
disease management, care co-ordination and electronic
AHIP stressed that its proposal is based on programmes that are
already working. “Health insurance plans have made measurable
progress, but the nation needs a co-ordinated approach across the
public and private sectors to maximise the impact of these
strategies,” said AHIP’s president and CEO Karen Ignagni.
In broad terms AHIP’s proposals are:
• Provide service providers and consumers access to up-to-date
information on which health care services are most effective and
provide best value;
• Widespread adoption of electronic health records, electronic
prescribing and electronic payments;
• Replace the medical liability system with a independent dispute
• Align payments for services with the quality of care patients
• Employ strategies that emphasise prevention, healthy lifestyles
and improved chronic care.
Professional services firm PricewaterhouseCoopers reviewed AHIP’s
proposals and estimates that if fully implemented they could result
in total health care expenditure being $145 billion lower than
projected by 2015.
US individual life activity in retreat
New individually underwritten life insurance business in the US
declined in April 2008, continuing a trend evident for more than
According to market analytical company MIB Group, application
activity in April was 7.9 percent lower than in the previous month
and 5.1 percent lower than in April 2007. The only growth in new
business in April was in the 60 and over age group where,
continuing a more than one year trend, activity was up 4.3 percent
compared with April 2007. During the first four months of 2008
activity in the sector was up 5.8 percent compared with the first
four months of 2007.
The sharpest fall in new business was in the up to 44 age group
where activity in April was down 7.3 percent compared with a year
earlier. In the 45 to 59 age group activity fell by 4.1